Unsecured Debt Limit Question...

[NoTomatoCan]

Met with our attorney today. Good news on the 401k front - our Trustee and Judge allow 401k loans and contributions so long as there was significant history of contributions. Haven't filed yet, but due to a CH7 BK 12 years ago with the same judge, I will automatically have this judge and his one trustee again.

The only concern my attorney had (and two other attorneys that I initially interviewed did not have this concern at all) is regarding the unsecured debt limit of $336k.

We have CCs at $86k, Student Loans at $146k, and other unsecured at $30k. ($262k total unsecured).

Our attorney believes that our Lien Strip ($150k) will put us over the $336k unsecured debt limit. ($262k + $150k = $412k)


First Question: Does the lien strip amount go under unsecured debt? I didn't think that was right?


In the alternative, due to very little joint debt, both my wife and I could file separately and would each be under the $336k unsecured debt threshold, even with the $150k added to each of our debts.


Second Question: Is there anything preventing us from filing two separate chapter 13 cases to meet the $336k debt threshold? I understand that there will be additional fees and costs, and also understand that the trustee may administratively join the cases. Just wondering if this is a possibility.

[justbroke]

First Question: Does the lien strip amount go under unsecured debt? I didn't think that was right?

This is District specific. My District did not require the lien strip to be listed as unsecured because it had not been adjudicated yet in a trial. I believe that the 9th Circuit (including California), does actually require a secured debt that is wholly unsecured, to be listed as unsecured. That's for your lawyer to figure out.

Second Question: Is there anything preventing us from filing two separate chapter 13 cases to meet the $336k debt threshold? I understand that there will be additional fees and costs, and also understand that the trustee may administratively join the cases. Just wondering if this is a possibility.

That would be the strangest thing. You may end up paying more per month. I guess you could file two cases and have them jointly administered. What does your attorney say?

[NoTomatoCan]

The attorney is doing some research on filing separately. Ultimately I am sure they would be administered jointly if we went that route. Not terribly concerned about if I would pay more if we filed separately - I figure we can work all that stuff out. I just want to make sure we can get into a CH13.

My attorney thought of it this way... What is to prevent a spouse from filing individually, and then the other spouse filing 6 months later? Nothing. So why would this be any different?

I do not want to even consider the alternative of a CH11.

[NoTomatoCan]

Justbroke - Since you seem to have done a lot of research on debt limits, do you have any thoughts regarding - In re: Werts, 2009 WL 2563468?

I know it has been a while since this was something you have had to deal with, and this relatively new case might have not been on your radar.

I don't have full WestLaw access, but here is a synopsis:

http://west.thomson.com/practice/bankruptcy/newsletter/2009/09/23/

The court took an unusually pragmatic approach by basically saying "why force a married couple who qualify individually to file separately and cause all that administrative headache?"

[justbroke]

No, that case wasn't on my radar. I will say that some Judges are more liberal in their approach and opine on matters that are not in the majority view. However, his ruling makes sense, as you could just file separately anyhow... and still be jointly administered. I actually like his logic. The second that controls this, 11 USC 109, basically is about who can be a debtor. It doesn't make any statement about the limits of a petition, but only of a Debtor. I like that.

Below are cases that I reviewed a while back...

In re Guastella, 341 B.R. 908 (9th Cir. BAP 2006) Tentative decision quantified the amount of the debt the debtor would be liable for in an amount certain. The debt was thus liquidated, since is was readily ascertainable. The court correctly looked beyond the schedules to determine the amount of the debt (which was listed as $0) and correctly determined that the schedules were not filed in good faith.

In re Slack, 187 F.3d 1070, 1073-75 (9th Cir. 1999) “. . .[A] debt is liquidated if the amount is readily ascertainable, notwithstanding the fact that the question of liability has not been finally decided.”

In re Nicholes, 184 B.R. 82, 99-91 (9th Cir. B.A.P. 1995)In re Carty, 149 B.R. 601 (9th Cir. B.A.P. 1993) 109(g) 180 day period not tolled or renewed between time of second filing and time when motion to dismiss heard, at least based on equities of the case (10 months lapse between second filing and motion to dismiss)

http://207.41.19.15/web/bap.nsf/0/54.../?opendocument
http://www.nysb.uscourts.gov/opinion...23_opinion.pdfhttp://cases.justia.com/us-court-of-...7/1070/491304/

See In re Robertson, 84 B.R. 109 (Bankr. S.D. Ohio 1988) (holding that debt must be proved to exceed the statutory limit at the time of filing) (citing In the Matter of Pearsons, 773 F.2d 751 (6th Cir. 1988) (holding that court will only look at petition to determine the amount of the debts owed)); In re Morton, 43 B.R. 215, 220 (Bankr. E.D.N.Y. 1984).

If you're in the 9th District, they summarize their caselaw in one spot!

[catleg]

I am in this same type of situation, filed two chapter 13 cases, for my wife and I, no issues so far.
The trick in filling out the B22C is, if you don't use the marital adjustment, you will count incomes twice, but household expenses only once. So try to back out the spouses' income and taxes, 401k, and plan payments out using the marital adjustment, then the amount of disposable income should end up being the same for each person. (by backing out the plan payment in the marital adjustment you avoid paying double).

In my 341 the trustee said he wants to combine the cases and then come up with a "consensual" split of the plan payments. We still have to get back to him (through our atty) with a revised 22c, the original got muffed by the office and has to be fixed.

Obviously this process requires a lot of patience. It causes an "above average" degree of difficulty. I just hope the trustee gets tired of it before my lawyer does.